The Financial Conduct Authority (FCA) has introduced new rules to improve fairness and transparency in multi-occupancy building insurance, following concerns that leaseholders were facing excessive and hidden costs.

Under the new measures, insurers and brokers must treat residential leaseholders as “customers” for key regulatory purposes, ensuring products offer fair value and that firms act in their best interests. Companies will now be required to disclose clear information about policy cover, total premiums, commission levels, and any payments made to third parties such as property managing agents or freeholders.

FirstPort must now give leaseholders the:

• Right to clear insurance information about the policy covering their building.
• Right to see the full premium and commission breakdown, including payments to brokers, freeholders or managing agents.
• Right to fair value, meaning insurance must be priced and structured in leaseholders’ interests — not just the freeholder’s.
• Right to have their interests formally considered, as leaseholders are now treated as “customers” under key FCA rules.
• Right to request information directly from insurers or brokers if it isn’t passed on.
• Right to challenge unreasonable insurance costs with better evidence and transparency.

The FCA said it found cases where commissions reached as high as 62%, with poor justification for the charges. 

The new rules aim to curb excessive remuneration and prevent conflicts of interest that inflate costs for residents.

The changes apply to residential multi-occupancy buildings and came into force on 31 December 2023.